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SBA rules · SOP 50 10 8.1

Can an SBA loan finance a nonprofit?

No, non-profit organizations are not eligible for SBA 7(a) or 504 loan financing.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

  • For-profit requirement: All applicants must be organized for profit, and non-profit businesses are ineligible for SBA business loan assistance.
  • For-profit subsidiaries: A for-profit subsidiary of a non-profit may be eligible if all other eligibility requirements are met and loan proceeds are used exclusively for the benefit of the for-profit business.
  • Size determination: The non-profit affiliate's receipts or employees must be included when determining the for-profit entity's size, except for businesses owned and controlled by a Native Hawaiian Organization.
  • Guaranty requirement: If the non-profit affiliate owns 20% or more of the for-profit business, it must guarantee the loan; if it cannot or will not provide the guaranty, the for-profit business is ineligible.

The source

What the SOP says

“All Applicants must be organized for profit. Non-profit businesses are not eligible for SBA business loan assistance. For-profit subsidiaries of non-profits may be eligible.
SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Organized for Profit (lines 329-340)✓ Verified
“Loan proceeds must be used exclusively for the benefit of the for-profit business.
SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Organized for Profit (lines 329-340)✓ Verified
“If the non-profit affiliate owns 20% or more of the for-profit business but cannot or will not guarantee the loan, the for-profit business is not eligible.
SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Organized for Profit (lines 329-340)✓ Verified
“Non-profit businesses are ineligible (for-profit subsidiaries may be eligible).
SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Types of Ineligible Businesses (lines 388-399)✓ Verified

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More on who and what is eligible

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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.